Canton Fair Revealed: Winter of the Textile Industry is Coming
Author: Nov 10, 2011 09:50
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168tex News: 5th Nov, bosses of the enterprises and delegates going for the Canton Textile Fair have come back one after another. The difference from that of the previous years is that few of them are smiles; instead, there are worries on their faces. Manager Liu told the reporter, “Now European buyers are trying hard to suppress the price, which forced us to lower down the production cost.”
5th Nov, bosses of the enterprises and delegates going for the Canton Textile Fair have come back one after another. The difference from that of the previous years is that few of them are smiles; instead, there are worries on their faces. Wanglin, a manager of a textile company in Qingdao city, she is not optimistic about the benefit estimation. RMB appreciation, production cost increased, small and medium sized enterprises like hers are facing a great cost difficulty.
1. Current situation: Qingdao textile trade enterprises are hibernating.
Orders are sharply reduced from Canton Fair.
Wangling told the journalist, the Canton Fair this year is too depressed. In her words, “There were scarcely foreigners. The European debt crisis is vividly reflected in the fair. Most of them hold wait and see attitude, and very cautious. As for us, even accept some orders, there is almost no profit margin.”
Wangling said: “Companies like ours are greatly influenced by the oversea economic situations. This year, foreign trade order prices, quantities have sharply reduced, comparing with the previous years. Many foreign buyers are only come to have a look. The business is hard.”
Manufacturers cut down cost one after another.
For the influence of economic crisis, many foreign markets are depressed and many foreign families are restraining on expenses. Foreign buyers keep asking to lowering down the price, even if lowering down its quality. Manufacturers have found that foreign buyers are not that much care about high priced high quality products, which forced manufacturers try hard to develop cheap and fine products.
Manager Liu, come from a cooperated home textile accessories company of Wanglin’s, he said: “Now the European buyers try hard to lowering down the price, which forced us to cut down costs. Otherwise, we will suffer from a loss.” Now there are two kinds of manufacturers, one of them choose cutting cost and the other stick to the price, promising a good quality. But as a result, the later one may be suffer from a high stock.
Downstream processing factories want to change field.
Manager Yang, boss of a textile export company of Qingdao. Although several year ago, there may be 10% profit margin of his orders. But such a profit margin no longer exist. Manager Yang told the reporter: “It is hard this year. Previously, if the fabric is sold at 5.5CNY/m, now it is 4.7CNY/m. Small mills are everywhere, interacting with each other to get the business.”
Manager Yang introduced that, small factories like his that do foreign trade businesses are numerous. Sometimes they gather together to communicate with each other. And they find that small mills like theirs, with low technology content and low added value, will facing a big challenge. He said: “Some of my friends have closed factories. Who will do this if it makes no money and I have also planned to sustain for several months, probably change a field next year, going to my relatives in Shandong Weifang.”
2. Multiple factors lead to this situation
According to market sources, over the past two years, textile feedstock price are mostly increased, in addition with an activeness of textile enterprises, further boosted textile feedstock price up. Moreover, the increasing labor cost and RMB has make small mills add insult to injury. Manager Yang said, “Feedstock price is increasing, like cotton yarn, filature silk and etc. But fabric price has not followed up. And the increasing labor cost has endow foreign trade enterprises more and more pressure. Especially in coastal cities, like Rizhao and Qingdao, labor cost is becoming higher; otherwise, there will be no workers.”
Market sources said, Europe, as the first target market of our textile industry, its weak consumption will undoubtedly make some influence on our textile and garment exportation. But as the European buyers force down the price, foreign trade orders this year has universally reduced by 20%~30%. In addition, RMB appreciation has also contributes more pressure to enterprises. And the profit margin is also narrowed by the down regulation of tax rebate rate.
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Editor: Candy From: 168Tex.com
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